|
Bills address state natural gas authority Early proposals would grant more money and allow move away from Valdez Larry Persily Petroleum News Juneau Correspondent
egislation filed in advance of Alaska lawmakers’ opening day ceremonies Jan. 12 could give two victories to the Alaska Natural Gas Development Authority but could also put it in the middle of a political fight between two areas of the state.
One bill, introduced by Senate President Gene Therriault, would appropriate $2.15 million to the authority, which has been calling for the additional funding since last August but as of Jan. 6 hadn’t spent any of the extra $200,000 it received from legislators in late October.
A second bill, also introduced by Therriault, a North Pole Republican, would exempt the authority from state procurement laws, allowing it to more easily pick and choose contractors as it spends money in a quest to build a state-owned liquefied natural gas project.
The authority’s board in recent months has discussed its need for an exemption from state competitive bidding laws, which several members see as a cumbersome impediment to building a multibillion-dollar pipeline to bring North Slope gas to market.
The third measure among the first batch of pre-filed legislation comes from Kenai Sen. Tom Wagoner, who wants to amend state law so that the gas authority could consider running its pipeline to a Cook Inlet port instead of Valdez. The voter-approved citizens’ initiative that established the state gas authority in November 2002 says the LNG shipping terminal must be at Valdez. Opposition likely to changing terminal site Changing the law to allow consideration of another terminal site will not go down easy with the initiative’s sponsor and gas authority board member Scott Heyworth, who believes a pipeline to a Kenai Peninsula port on Cook Inlet would fail to win needed environmental permits and that even studying the option would waste time.
Opposition also is likely from Valdez supporters looking forward to a multibillion-dollar construction project in their city, including gas authority board member John Kelsey of Valdez.
The gas authority board has not formally addressed the issue, said Harold Heinze, chief executive officer, though he expects to ask the board for direction as to how he should testify on the bill if asked by legislators.
Supporters of building the LNG terminal at Valdez say looking at another possible site would delay the project, Heinze said, adding that the state authority cannot afford any slowdowns as it tries to compete with other LNG suppliers for a limited number of buyers.
“That is an argument that we would have to address really seriously,” Heinze said. A lot of work still to do The gas authority, charged by voters with building a state-owned LNG project, is working to determine if the project is economically feasible, if it can borrow money to build the estimated $12 billion project, if it can negotiate a deal to buy gas from the North Slope producers, and if it can find buyers wiling to commit to take 2 billion cubic feet a day of LNG, worth more than $2.5 billion a year at $3.50 per thousand cubic feet.
“There is a lot of speculation that a line to Valdez is not economical … which means the current gas pipeline proposal may be doomed,” said Sen. Wagoner, a freshman Republican, explaining the need for his bill (Senate Bill 247) to add Cook Inlet as a potential LNG terminal site.
The Kenai Peninsula Borough last September told the gas authority board the borough supported legislation that would allow equal consideration of a Cook Inlet site for the project. In addition to wanting the construction and operating jobs just as much as Valdez wants them, Kenai Peninsula commercial and residential natural gas users — including ConocoPhillips’ 34-year-old LNG export plant and Agrium’s fertilizer plant — worry whether Cook Inlet supplies will be sufficient to meet their growing needs.
The other pre-filed bills affecting the gas authority are:
Additional funds at issue Senate Bill 241 would appropriate $2.15 million for “cost, risk and benefit analysis and for design of a pipeline and related facilities.” The bill’s sponsor, Sen. Therriault, said he picked that sum because it would bring the authority’s total Fiscal 2004 appropriation to $2.5 million, the amount the board has been asking for since August.
Legislators last session appropriated $150,000 for the fiscal year that started July 1, and then added $200,000 in October when the authority said it needed the extra money immediately for consultant contractors as it was chasing after possible LNG buyers. As of Jan. 6, the authority had not spent or signed contracts to spend any of the $200,000, according to the Department of Revenue, which handles administrative work for the authority.
Therriault said the authority will need to prove to lawmakers that the $2.15 million is needed to get the job done.
The governor’s budget director is among those who will need convincing.
“From our perspective, ANGDA received the initial $150,000 to develop a timeline and budget by which it would address the 10 elements that were in the ballot initiative; this hasn’t been done,” said Cheryl Frasca, director of the Office of Management and Budget for Gov. Frank Murkowski. “They then needed another $200,000 to do what they were supposed to have done with the first $150,000 and to do an analysis of in-state benefits. This still hasn’t been done.
“Until these are received, there is no basis to provide additional money,” Frasca said.
The voter-initiative requires the authority to present a project plan to the Legislature by June. Procurement code exemption Although Therriault introduced Senate Bill 253 to exempt the authority from the state procurement code, he said he did so only to “get the idea to the table” and not as a full endorsement. “It’s something we need to consider,” he said.
“The authority must be prepared to explain what will be done with such powers.”
The exemption could be useful, he said, if the board needed to get a particular consultant under contract quickly.
State law already provides procedures for so-called alternative procurements — sole-source contracts — when an agency can justify to purchasing authorities an overriding need and justification to bypass competitive bidding.
| 